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Topic: So what does it cost to launch a new business? (Read 1444 times)

Considering I have all the needed equipment, what's the average cost to launch? How much would you spend on marketing to an area with a population of 20,000 people? I am also trying to determine the inventory levels to have on hand (I don't want to run out but I also don't want to waste product)

Considering I have all the needed equipment, what's the average cost to launch? How much would you spend on marketing to an area with a population of 20,000 people? I am also trying to determine the inventory levels to have on hand (I don't want to run out but I also don't want to waste product)

Bill

Bill, marketing is not about spending, it’s about effectiveness. You can run a very effective campaign for very little $$; conversely, you can spend a lot and get nothing. You might check out a book called Guerrilla Marketing. For a 20,000 population area, I would think you could spend next to nothing.

As for inventory levels, it really depends on your volume, the number of days a distributor will give you drops, how much volatility you have in your business, the perishability of the product, your storage space, etc. I ran a restaurant for a couple years, and there is no doubt in my mind that shrink is directly proportional to the amount of excess inventory. The more you have, the easier it is for people to steal, and the less they worry about making mistakes and wasting ingredients. That being said, being out of stock costs you money in more ways than one. Personally, I’d be purposefully heavy on inventory in the beginning. Shrink will hurt you a lot less than a bad launch which you may never recover from. After a couple months, you should know how to order. Keep detailed usage records. Your distributor can help you out a lot with this, menu analysis, and all sorts of other free functions most places foolishly ignore. Get your local food brokers involved too. They can be a great asset in showing you new items, menu ideas, finding rebates, etc.

For a town of 20,000 next to nothing is the exact amount I was thinking would be needed to run an effective marketing campaign. In fact, it is a great size for grass roots marketing.

There is one now well known case of a person who opened a well regarded pizzeria in one of the toughest markets in the country, New York City (Brooklyn). Before opening, this person appeared in local newspapers, internet blogs, videos and other media. He paid nothing for that exposure.

His marketing campaign essentially consisted of spending about $600 on materials to build an oven in his backyard and the time and expenses needed to make test pizzas in this oven. He would invite over a mixture of friends and, at first, local bloggers to his backyard pizza tastings (a couple of times a month). Word spread and very quickly local newspapers and more nationally focused internet websites caught wind and started contacting him to come to one of the tastings (yours truly being one of them).

Over time the anticipation of this pizzeria opening in Brooklyn, all created from those backyard pizza tastings, reached the more major New York magazine and internet publications....further increasing excitement over the opening of the pizzeria. Again, all at no cost.

Bill, not that such a plan would work for you, but a smaller community such as yours makes it all the easier to press the flesh and create interest. In addition, and also important, what exactly about your plan to add pizza to your offerings is worthy of excitement? What makes it different, worthy of a buzz?

Guerrilla Marketing is a great investment. I'm looking at a copy right now. You would do well to purchase it. --K

Great ideas about some exposure that is cheap and gets the town talking. and thank you for the help thus far. I just purchased the book and some others and I'm waiting for it in the mail right now.

So the overall inventory consensus is that in the beginning, having more on hand and a close eye on it is the way to go for a launch, and learn the appropriate levels as things go on. Pretty common sense, but the confirmation is appreciated.